Google braces for huge EU fine over Android

Google faced a record EU fine Wednesday (Jul 18) for using its Android smartphone system to illegally boost its search engine, in a ruling that risks a fresh clash between Brussels and Washington.

Google is facing a massive fine from the EU this week for abusing its dominant market position AFP/JUSTIN SULLIVAN

The EU's Competition Commissioner Margrethe Vestager is set to announce a 4.3-billion-euro (US$5 billion) penalty against the US tech giant, according to Bloomberg News.

Vestager is expected to say in a press conference at 1100 GMT that Google abused its dominant position in the market by forcing major phone makers to pre-install its search engine and Google Chrome browser, thereby freezing out rivals.

The antitrust chief is also expected to order Google to make major changes to Android, which is used on around 80 per cent of phones in Europe.

The new fine will, if confirmed, surpass the 2.4-billion-euro penalty that the EU imposed on Google over its shopping comparison service in 2017.

The long-awaited decision comes as fears of a transatlantic trade war mount due to President Donald Trump's decision to impose tariffs on European steel and aluminium exports.

Vestager spoke by telephone with Google chief Sundar Pichai on Tuesday night to tell him about the decision in advance, a source close to the matter told AFP.

"EXCLUDED COMPETITORS"

Two European sources told AFP the fine would be "several billion euros" but said the exact amount would not be finalised until European Commission chief Jean-Claude Juncker meets his commissioners on Wednesday morning.

EU rules say Google could be fined up to 10 per cent of parent company Alphabet's annual revenue, which hit US$110.9 billion in 2017.

"The fine is based on the length of the infraction, but also on whether antitrust authorities believe there was an intention to commit the offence, and whether they excluded competitors or not," said another source close to the matter.

Danish former minister Vestager has targeted a series of Silicon Valley giants in her four years as the 28-nation European Union's competition commissioner, winning praise in Europe but angering Washington.

Brussels has repeatedly targeted Google over the past decade amid concerns about the Silicon Valley giant's dominance of internet search across Europe, where it commands about 90 per cent of the market.

In the Android file, the European Commission has accused Google of requiring mobile manufacturers such as South Korea's Samsung and China's Huawei to pre-install its search engine and Google Chrome browser on phones.

They were also made to set Google Search as the default, as a condition of licensing some Google apps.

Google Search and Chrome are as a result pre-installed on the "significant majority" of devices sold in the EU, the commission says.

The complaint formally lodged in April also accuses Google of preventing manufacturers from selling smartphones that run on rival operating systems based on the Android open source code.

Google also gave "financial incentives" to manufacturers and mobile network operators if they pre-installed Google Search on their devices, the commission said.

SILICON SCALPS

Vestager's other major scalps include Amazon and Apple.

The EU ordered Apple in 2016 to pay Ireland 13 billion euros in back taxes that the iconic maker of iPhones and iPads had avoided by a tax deal with Dublin.

It has also taken on Facebook over privacy issues after it admitted that millions of users may have had their data hijacked by British consultancy firm Cambridge Analytica, which was working for Trump's 2016 election campaign.

But Brussels has had US tech giants in its sights for a decade in a half, since it imposed a huge 497 million euro fine on Microsoft in 2004 for anti-competitive behaviour and ruled it must make changes to its Windows system.

The Google decision comes just one week before European Commission chief Jean-Claude Juncker is due to travel to the United States for crucial talks with Trump on the tariffs dispute and other issues.

Transatlantic tensions are also high over Trump's berating NATO allies on defence spending at a summit last week, over his summit with Russian leader Vladimir Putin, and over the US president's pull-out from the Iran nuclear agreement and Paris climate deal.